Danske Bank in Northern Ireland reports a profit before impairments of £91m for the 12 months to the end of December 2016. This represents a 5% increase year-on-year.

The year-on-year increase reflects growth in both customer lending and deposit volumes, partially offset by the negative impact of a lower Bank of England Base Rate. It also includes higher cards related income.

Danske Bank reports a net credit in loan impairments of £26m, down from £55m in 2015 – indicative of a continuing recovery in property values and in the trading results of the Bank’s business customers.

Danske Bank continues to have a strong capacity to support new lending as demonstrated by a loan to deposit ratio of 72% at 31 December 2016.

Commenting on the results, Danske Bank UK CEO Kevin Kingston said:

“I am pleased with what is a strong financial performance in 2016. With the prospect of significant change in the external environment, and slow growth in the local economy, we have delivered an increased operating profit of £91 million.

“Alongside strong revenue performance, we have seen continued net loan impairment recoveries, although these write backs have declined throughout 2016 and we expect this trend to continue.

“Recognising the need for further investment to keep pace with customer expectations, we introduced a number of new customer initiatives in 2016 - the most successful being our enhanced mortgages proposition.

“We began the year with an exciting new £2,000 cashback offer targeted at first time buyers, switchers and home movers. A sustained focus on this market throughout the year resulted in new mortgage lending increasing across all customer touchpoints, but particularly via the broker channel. Mortgage approvals have almost doubled in the space of a year, with a 96% uplift compared to 2015.

“We also saw growth in the number of people opening personal current accounts, driven by a focus on attracting younger people to open accounts with us, together with the launch of our new Danske Cash Reward personal current account. We were the first of the four main local Northern Ireland banks to introduce such an account to the marketplace.

“It was also a good year for Business Banking. A new improved business current account was launched, Danske Small Business Digital, and a £500 cashback incentive, unique to the local small business market, was introduced for switchers and start-ups.

“The improved small business proposition resulted in strong growth in the number of businesses switching to us and in higher customer satisfaction levels. Since the business current account was introduced in April 2016, we have seen over 30 new small business relationships established every week.

“In Corporate Banking, uncertainty around Brexit was a factor in the second half of the year. While customers were not cancelling business projects, they were also not bringing new projects to us at the same rate, and overall demand was more subdued.

“The way customers bank with us has changed significantly in recent years. In 2016, digital transactions grew by 16% year-on-year. Mobile banking logons also continued to grow strongly, with monthly digital logons reaching an all-time high of 3.5 million in December.

“As a business, we are committed to responding to these changing customer behaviours and therefore priorities for investment continue to adapt and evolve. It was decided that two Belfast branches would merge into our flagship Donegall Square West city centre branch in April 2017. At the same time, the relocation of our Downpatrick branch in October 2016 to modern premises in the town, created an opportunity to develop an innovative new style of branch. More investment in the branch network is planned for 2017.

“2016 also saw the first Bank of England rate change in more than 7 years. All banks are operating in an environment of historically low interest rates for a prolonged period, and this will affect our profitability moving forward. It remains to be seen how the EU Referendum result will impact on confidence levels and economic conditions in 2017.

“Despite the prospect of significant change in the external environment, we remain fully committed to our role as a driver of growth in the local economy. We have the capacity to support substantial new lending to both personal and business customers. In 2017 our strong position in the marketplace will be complemented by the introduction of more innovative banking solutions and a drive to improve overall customer experiences.”

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Danske Bank is a trading name of Northern Bank Limited. Registered in Northern Ireland R568. Registered office: Donegall Square West, Belfast BT1 6JS. Northern Bank Limited is a member of the Danske Bank Group. Northern Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Northern Bank Limited is entered in the Register maintained by the Financial Conduct Authority, Financial Services Register registration number 122261. VAT number GB853 7590 92. Northern Bank Limited adheres to the Standards of Lending Practice which are monitored and enforced by the LSB: www.lendingstandardsboard.org.uk.